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ACCA Applied Skills · Corporate and Business Law (Global) · Transportation documents and means of payment

Dara in Country A draws a written, signed, unconditional order addressed to Bexo Ltd in Country B, telling Bexo to pay 50,000 to Calum or to his order in 90 days. Which of the following correctly describes Bexo Ltd's position before it signs the bill?

Bexo Ltd is the drawee, the party ordered to pay. It has no liability on the bill until it accepts by signing. Dara is the drawer who issues the order, and Calum is the payee who is to receive payment.

  1. ABexo Ltd is the drawee and is not liable on the bill until it accepts itCorrect
  2. BBexo Ltd is the payee and can demand payment from Dara
  3. CBexo Ltd is the drawer and is primarily liable on the bill from the date of issue

Explanation

The person who draws the bill is the drawer (Dara), the person ordered to pay is the drawee (Bexo) and the person to be paid is the payee (Calum). A drawee has no liability on the instrument until it signs to accept. Describing Bexo as drawer is wrong because the drawer is the person who issues the order.

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